MBA Dissertation1ai

I

Department of Management

Submitted to

Huddersfield University Business School,

Department of Management

In partial fulfilment of the requirement for the degree of,

Masters of Business Administration (Part –Time)

TITLE: Achieving Excellence for Twin Valley Homes Customers

Mr. Anil Mehta

Student number: 0775724017

MBA P/T (January/2008)

DISSERTATION TYPE: 1

DATE SUBMITTED: 1st December 2008

SUPERVISED BY: Mr. Christopher Wainwright, Blackburn College

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Acknowledgements

The following acknowledgements have been made to those organisations and

individuals that have made it possible for me to study for the MBA qualification, the

research work and those who have added value to my academic journey in 2008.

1. Twin Valley Homes, my employer and sponsor for my MBA programme.

2. All staff at the East Lancashire Business School at Blackburn College who

have provided excellent academic and tutorial support. In particular John

Ashcroft, Steve Whewell, Chris Wainwright, Cefyn Grafton and Andy Davies.

3. My learning set colleagues: Dom Coll, Julie Bannister, Julian Bickford, Paul

Foster, Graham Brownsmith and Jon Lomas.

4. John Leatham, Customer Service Director from Ford Retail, Steve Langton,

Sales Director from Perry’s Mazda and Paul Rushton, Sales Director from

Greenacre Honda.

5. Last, but not least; my family both near and extended, who have provided

me with the support required in completing this journey.

III

Joseph

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Abstract

The author conducted a research project to ‘Evaluate the Merits of Customer Service for

a Housing Association.’ By comparing and contrasting the responses from a series of

semi-structured interviews with Twin Valley Homes (TVH), the author’s employer which

is a Housing Association and three car dealerships; the author wanted to discover if

alternative practices of customer service discovered within the car dealership market

could provide a competitive advantage within the non-competitive environment of the

social housing sector.

The author has used the results of the study to provide good practice for on how a

strategic approach to customer satisfaction could deliver a more profitable organisation.

The author triangulated his findings with traditional and contemporary management

and customer service theories.

The author discovered that his initial premise that the social housing sector was non-

competitive was incorrect, via an analysis of Porter’s five forces. The environment that

TVH inhabits was discovered to be competitive; however the intensity of the rivalry

analysed was very low. This discovery was backed up by the primary research findings.

This meant that the author could not propose a new competitive theory / hypothesis to

explain his initial hypothesis regarding non competitive environments, as suggested in

his evaluation of research methodologies.

However, the author recognised that the external, environmental conditions within the

social housing sector have made it difficult to allow TVH to deliver a differentiated

strategy that could provide the organisation with optimal returns seen within the car

dealership market. Car dealerships recognise the benefits of a differentiated customer

service strategy delivering competitive advantage. They align branding and plan

customer journeys to meet their strategic aims and thus deliver a competitive

advantage. Clarity of this discovery was dependant on the car dealership interviewed,

however all organisations (including TVH) saw that customer service was an essential

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prerequisite to their businesses – only one car dealership could not make the strategic

connection; however this may have been down to cognitive factors surrounding the

interview subject.

A range of recommendations were made for TVH to achieve excellence by employing a

competitive advantage in excellent customer service. These consisted of specific

strategic directions triangulated with the secondary research in the literature review, to

process improvements that would add more customer value to existing procedures and

policies within Twin Valley Homes. The author also adapted two strategic models to

produce a hybrid strategic model that has a new perspective in understanding the value

/ supply chain and strategic choice. This simplified strategic choices to leadership within

Twin Valley Homes.

The author critically reflected and reviewed the research project and offered a number

of further suggestions for study to advance the understanding of competition theory

within a low competitive environment.

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Table of Contents

Error! Bookmark not defined.Appendix A – Housing Inspectorate, Key line of Enquiry,

Access and Customer Care in Housing Services

Appendix B – Revised Charter Mark Criteria and the Customer Service Excellence

Standard

Appendix C – Twin Valley Homes Customer Service Performance Framework

Appendix D – Twin Valley Homes Strategy Statement 2008-2011

Appendix E – MBA Dissertation Proposal

Appendix F –Semi-Structured Research Questions

Appendix G – Standard Letter to Dealerships

Appendix H – Ford Retail Customer Strategy Presentation – ‘Moments of Truth’

VII

List of Figures and Tables

Figure 1 Porter’s Five Forces adapted for Twin Valley Homes within the Landlord Market

of Blackburn with Darwen ................................................................................................. 26

Figure 2 The Twin Valley Homes Strategy Clock Demonstrating Current Strategic

Placement and Competitive Strategic Options .................................................................. 31

Figure 3 The Elements of the Service Profit Chain ........................................................... 32

Figure 4 The Twin Valley Homes Value Chain .................................................................. 33

Figure 5 A Process for Planning a Customer Value Delivery Strategy ............................. 37

Figure 6 Matching the Supply / Value Chain with Competitive and Generic strategy .... 83

Figure 7 The Gibbs Reflective Cycle .................................................................................. 86

Table 1 Car Dealer Sample Evolution for the Research Project ....................................... 56

Table 2 Results of the Twin Valley Homes Semi-Structured Interviews ........................... 59

Table 3 Results of the Car Dealership Semi-Structured Interviews .................................. 64

Table 4 Analysis of Primary Research against the Conceptual Framework ..................... 69

Table 5 Reflective Analysis of the Research Project (Gibbs Framework) ......................... 87

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1.0 Introduction

At the Huddersfield University Business School (HUBS) Research Methods Residential

in March 2008, the author proposed a title, topic area and aims for his 2008 MBA

dissertation and research project. The title for the research project is ‘Achieving

Excellence for Twin Valley Homes Customers’. The author stated on the

Huddersfield University Business School dissertation proposal form, that this would

be a type 1 dissertation, i.e. a dissertation that focuses upon researching

organisations. The title was proposed to tutorial staff after generating and refining

research ideas at the residential, with both colleagues and tutors.

Saunders, Lewis and Thornhill (1997:14-24) suggested that such a procedure

involved both rational thinking and creative thinking. The author examined his own

strengths and interests of customer service, as he is the Customer Services

Development Manager for Twin Valley Homes, a Housing Association; with more

than a passing interest in cars. Although the author is employed by a Housing

Association he has previously worked within industry, and for the public sector thus

offering a depth of perspective.

The conceptual framework as defined by Mujer Sana Comunidad Sana (2003) stated

that

‘...it should be an overview of ideas or concepts that shape the way work is done

in a project.’ (Mujer Sana Comunidad Sana: 2003)

Wainwright (2008) suggested that the conceptual framework is indeed the synthesis

and clarification of the

‘...key concepts, terminologies and alternative interpretations of the initial

question.’ (Wainwright: 2008)

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Within this chapter the author has attempted to define the issues behind this piece

of work, justified the reasons for attempting the work and then set out the context

and environment in which the research was set. This analysis allowed the author to

distil and synthesise research objectives that allowed the research to be both specific

and objective. The objectives helped determine the type of methodology and

research methods that were needed to allow the author to answer the primary

research aim.

Within the digital version of this dissertation, hyperlinks were embedded within the

text, thus allowing the reader to jump seamlessly to areas within the dissertation.

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1.1 Defining the Issues behind the Research Project

The general aims of the dissertation were to see how and if the importance of

customer service within an organisation, that were outside of the author’s own

experience, have translated into a housing association environment. The author

aimed to test the hypothesis that car dealers have viewed customer service as an

area of competitive advantage with their rivals. If so, can a housing association

learn from this different market, and derive a strategy that will also derive a

competitive advantage within a traditionally non-competitive market? In essence

the author was interested in how car dealers had as an industry, managed to

improve their customer satisfaction rating within the United Kingdom Customer

Satisfaction Index, UKCSI, (Institute of Customer Service: 2008) and to see what

good practice could be gleaned from researching the dealer’s strategies.

The research aims were brainstormed with colleagues. Saunders et al (1997:14-

24) proposed that brainstorming refers to the work of Moody (1983); who

suggested a prescribed route of:

‘...defining the problem then asking for suggestions from a group.’

(Moody: 1983)

The suggestions for research aims were reviewed and analysed and finally the

author decided upon a research method to investigate the research aim for the

dissertation. The research aim for this research project is ‘An Evaluation of the

Merits of Customer Service for a Housing Association.’

From this primary research aim, the research questions were defined with a high

measure of clarity into research objectives as suggested by Saunders et al

(1997:22-23); see the principal research questions below:

Do Car dealers view Customer Service as a strategic function to their

businesses?

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If so, would they see competitive advantage in providing excellent

Customer Service?

If not, where are their areas of competitive advantage?

How highly rated is customer service over other areas of additional value

within car dealerships?

What has been the influence of regulation in offering customer service

within the Car dealership market?

What factors influence customer service within car dealerships?

What controls, measures and management are implemented to allow

customer service to excel within car dealerships?

Can Twin Valley Homes (TVH) learn from this?

Should Customer Service have a strategic impact within TVH?

The author clarified the main research questions into key objectives that

supported the dissertation research aim (an evaluation of the merits of the

customer service for a housing association.) This allowed for greater specificity

and objectivity which can be found in the form of a conceptual framework for the

research, as follows:

To identify what areas of competitive advantage exist with car dealers.

To determine what importance customer service is to the competitive

strategies employed by car dealers.

To explore the internal and external factors that influence customer

service within car dealerships.

To discover what management tools are implemented to improve

customer service within car dealerships.

To compare and contrast the research objectives with TVH to discover if

there is a strategic advantage with the application of competitive

strategic frameworks within a non-competitive environment.

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1.2 The Importance of the Issues for the Research Project

‘A customer is the most important visitor on our premises; he is not

dependent on us. We are dependent on him. He is not an interruption in

our work. He is the purpose of it. He is not an outsider in our business. He

is part of it. We are not doing him a favour by serving him. He is doing us

a favour by giving us an opportunity to do so.’

Mahatma Ghandi

Traditionally the automotive sector returned poor customer satisfaction, yet now

this sector enjoyed higher satisfaction levels than the Local Government Sector

(Motor Trader: 2007); and (Institute of Customer Service: 2008). The author

identified the local government sector as the sector Housing Associations such as

Twin Valley homes existed within. The author also noticed that different

automotive manufacturer’s dealers had different satisfaction ratings. This was

highlighted in the Driver Power 2008 survey where Lexus, a Japanese brand of

Toyota, topped the satisfaction chart (Auto Express: 2008) at the expense of

traditionally stronger German brands such as Audi, BMW and Mercedes Benz

(Motor Trade: 1999). This change had also been recognised within the Ford

owned Jaguar brand where customer satisfaction had improved worldwide. The

Institute of Customer Service (ICS) had proved a link between excellence in

customer satisfaction, customer loyalty and profitability for organisations

(Johnston: 2001), stating that

‘There are financial benefits in offering a better service to customers.’

(Johnston: 2001)

The regulatory authority for Housing Associations within the UK is now called the

Tenant Services Authority (TSA); previously known as the Housing Corporation.

Peter Marsh the TSA Chief Executive explained the non-competitive environment

within an interview in October 2008, stating that

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‘The pressure on landlords to improve services is pretty low in terms of the

customer experience – people don’t want to take their rent money to

another landlord.’ (Murray: 2008).

Marsh continued to comment that he wanted

‘...to change the behaviour of landlords...views competition in terms of

cost, satisfaction and engagement...’ (Murray: 2008).

The inspectorate for the Social Housing sector is the Audit Commission. They set

out a number of ‘Key lines of Enquiry’ (KLOE’s) for housing organisations to meet

to demonstrate that they met the regulatory requirements of the Housing

Corporation / TSA. One KLOE, called ‘Access and Customer Care in Housing

Services’ that provided a number of key areas that a housing organisation must

meet to show that they have minimum compliance in customer care (Audit

Commission, 2007). These can be seen in Appendix A. The author suggests that

Marsh’s argument (Murray: 2008) means that the Access and Customer Care

KLOE does not provide customers with the dimension of service that they

require, and perhaps does not offer sufficient commercial, competitive

advantage for housing organisations that may wish to fully exploit excellent

customer service for the benefit of their customers.

The Social Housing Sector and Public Services sector, including TVH, used another

standard to demonstrate that they were excellent within customer services. This

was called Charter Mark, which has now been superseded by the new Customer

Service Excellence Standard (The Cabinet Office: 2007). A copy of the Charter

Mark and new Customer Excellence Standard can be seen in Appendix B. The

Charter Mark review was sponsored by the Prime Minister who stated that

‘The experience of the customer is at the heart of all service provision.’

(The Cabinet Office: 2007)

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Critically, Occupational Psychologist and Toyota Production System ‘disciple’,

John Seddon, stated in an interview that

‘Improving service does not come about by setting standards because

standards are arbitrary and only result in the creation of waste’ (Curmi:

2008) and (Vanguard: 2008)

The author suggested that these different opinions pose confusion to TVH, who

have been asked to become organisationally competent in all generic strategic

options, by the inspectorate and regulatory authorities, when dealing with the

competitive forces within their market sector. Porter (1980:34-36) proposed that

the three potential strategies that any organisation could employ: cost

leadership, differentiation and focus; all have been requested as standard by the

regulatory authorities. Management theory, in the form of Michael Porter’s

generic strategies, also stated that

‘Effectively implementing any of these generic strategies usually requires

total commitment and supporting organisational arrangements that are

diluted if there is more than one primary target. The generic strategies are

approaches to outperform competitors in the industry...’ (Porter: 1980:35)

It could therefore be said that the standardisation of social housing may have

contributed to the non-competitiveness of the market; this is also reflected in

Marsh’s earlier statement.

There was a need for TVH to look to benchmark and to understand strategic

principles from other organisations outside that market sector that they have

occupied. This research project tried to identify if the implementation of

excellent customer service in the form of a differentiated generic strategy. It was

hoped to have provided a competitive advantage and thus better profitability to

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TVH. However the conundrum is that the author perceived the market as non-

competitive.

Therefore, the author evaluated the competitive environment to investigate the

apparent lack of competition. The evidence from the research has provided an

insight to the social housing sector and government community, the dilemma

that regulation and standardisation has had on providing the customer with an

excellent service. The research has provided an insight into how a different

industry has used management theory to their advantage to provide the

customer with what they want and more critically; build profitability.

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1.3 The Contextual Environment for the Research Project

‘A Housing Association is a not-for-profit organisation which owns, lets and

manages rental housing.’ (Shanks: 2008)

Shanks (2008) suggested that accommodation that is owned by Housing

Associations is known as Social Housing, which includes government-owned

council housing and other affordable accommodation, and that housing

organisations that operate within this market are known as registered Social

Landlords (RSLs).

Twin Valley Homes (TVH) are the largest Registered Social Landlord (RSL) /

Housing Association that is based within the borough of Blackburn with Darwen,

having bought the old housing stock from the council. TVH are a part of the

Prospect Homes Group which also incorporates Housing Pendle; another RSL

based in East Lancashire. Prospect Homes Group (2007) stated that they were:

‘...managing almost 12,000 homes and over 15,000 tenancies across

Blackburn, Darwen, Pendle and Colne the Group have already invested

over £100 million in long term, sustainable improvements to our homes.’

(Prospect Homes Group: 2007)

The Housing Corporation (2007) and Twin Valley Homes (2007) stated that Twin

Valley Homes have a housing stock of 8137 homes and operates on a not-for-

profit basis. Twin Valley Home’s core competency, are that they are a landlord.

This meant that the organisation let / rent homes to customers at affordable

rents. In addition, the organisation provide customers with a responsive repairs

service along with cyclical, planned improvements that keep homes modern and

to a high standard. The organisation also provided many other services to

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customers such as benefit advice and help with Anti-Social Behaviour. These

services form a part of the contractual tenancy obligations that TVH have with its

customers.

Twin Valley homes had increasing satisfaction for over the last seven years since

their birth in 2001. The last satisfaction was measured in 2008 by a 50% survey of

all of their customers. This was recorded as 83.4% satisfied customers and 40.5%

very satisfied. This satisfaction rating has been considered as upper median

within the industry. The organisation also measured satisfaction every month of

its key customer interactions: telephone accessibility satisfaction (percentage

satisfied customers), repairs satisfaction (percentage very satisfied customers),

planned improvements (percentage very satisfied customers) and new customer

satisfaction (percentage very satisfied customers). This information was placed

within a matrix; see Appendix C, along with the 2008 survey that provided the

organisation with a barometer on satisfaction and to address areas of weakness.

The organisation also set a target of 55% very satisfied which is an average of all

of the aforementioned parameters seen in Appendix C. If this target is met along

with other organisational targets, a bonus is paid to all employees. The amount

of bonus is dependent upon the amount of compliance to the targets set.

Therefore, customer satisfaction has been very important to TVH. Customer

satisfaction formed a major part of the organisation’s performance management

framework and it was reflected within the organisation’s new three year strategy

which can be seen in Appendix D. The author suggested that the organisation’s

strategy included many areas of improvement and direction that could be

confusing to employees and customers alike. The research project has

investigated whether the strategic importance of customer satisfaction

excellence alone, could be made into an area of competitive advantage for an

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organisation that exists within an environment that has been viewed as non-

competitive.

The author decided to research car dealerships as they were more accessible

than car manufacturers and also closer to the final tier (end customer). The

following dealers agreed to be involved within the research project the sampling

parameters can be seen in 4.1 Evolution of the Research Sample:

Greenacre Honda a small single manufacturer, franchised dealership

based both in Clitheroe and Blackburn, Lancashire.

Perry’s Mazda, a larger multi manufacturer, franchised dealership based

within Blackburn, Lancashire.

Ford Retail wholly owned by Ford. They have a number of high profile

dealerships in the major towns/hubs in the UK.

All of these dealers were researched during challenging financial conditions. The

market for new cars was confronted by a number of factors that have hampered

car sales. In a news report on the Mail Online reported on these factors. Massey

(2008) suggested that the world markets were going through what was called the

‘credit crunch’ and this had impacted on car dealers and their customers. This

caused fear in buyers of a possible recession. This factor was combined with high

interest rates and the introduction of a new car tax based upon the

environmental efficiency of cars. The effect of a world increase in oil prices, and

thus high gasoline prices, also caused a slowdown in sales. Wonnacott (2008)

states in his article within the car industry magazine, Car

‘...that the market showed an 11.9 percent fall in private sales in June

2008 to 83,425 cars...the biggest month-on-month drop since February

2006 and a tell-tale sign that consumer confidence and soaring fuel prices

are finally beginning to bite in the showroom.’ (Wonnacott: 2008)

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The trading conditions reported by Wonnacott (2008) and Massey (2008) were

confirmed from The Local Government Association (2008) in a BBC Radio 4

interview where they stated that:

‘We are set to predict that the impact of a slowdown in the economy and

the credit crunch could lead to two million households in England, or 5

million people will be on the waiting list for social housing by 2010.’ (The

Local Government Association: 2008)

They also stated that:

‘Housing associations struggle to secure loans to create new affordable

housing due to the credit crunch.’ (The Local Government Association:

2008)

The author suggested that the high demand for housing combined with low

supply of social housing both nationally and within the borough of Blackburn

with Darwen may have stifled competition for TVH. This was because more

customers were presented with a limited choice of affordable housing.

Perhaps there was a clear case for not planning for a competitive advantage of

customer satisfaction in such conditions? Could current management theory

have helped within a non-competitive environment? Maybe a new management

theory exists to help within this perceived environment of non-competition?

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2.0 Literature Review

Saunders et al (1997:6-69) suggested in their book Research Methods for Business

Students, that once a research proposal has been completed, a critical review of

literature was necessary to increase the author’s knowledge of the subject areas that

were researched and offered the research a critical foundation of what was

previously found within the subject areas. Saunders et al (1997:38) stated that

‘The precise purpose of reading literature will depend upon the approach you are

intending to use in your research.’ (Saunders et al, 1997:38)

Saunders et al (1997) provided a literary source that offered the author a structured

reference source to use for the research methodology. The author looked at each of

the literature areas that he investigated and commented on the quality of literature

required to produce secondary research for the project.

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2.1 Research Methodology Literature Review

The author pursued a qualitative research strategy as seen in 3.0 Critical

Evaluation of Research Methodologies. Bryman and Bell (2003:25-26) in their

book Business Research Methods suggested

‘That a qualitative research strategy usually emphasises words rather

than quantification in the collection and analysis of data’. (Bryman and

Bell, 2003:25-26)

Bryman and Bell (2003) offered a more prescriptive, yet onerous perspective, for

research methodologies. The author had a vision that the research would have to

use interviews that would interpret human opinions and would then either prove

or disprove management theory and hypothesis. This was because customer

satisfaction has been seen as personal and based upon human perceptions, so

there was a clear phenomenological orientation. Bryman and Bell (2003:25-26)

proposed that a qualitative research strategy would suggest that an inductive

approach to research, that could generate theories, would need to be used; as

opposed to a deductive approach that would suggest a quantitative, inductive

approach. Riley, Wood, Clark, Wilkie and Szivas (2001:12-13) in their book

Researching and Writing Dissertations in Business and Management supported

this hypothesis and stated that

‘Induction is the process whereby the exploration and analysis of related

observations leads to the construction of a theory that systematically links

such observations in a meaningful way.’ (Riley et al, 2001:12-13)

Riley et al (2001) offered the author a very accessible piece of literature that

made the author’s understanding of research methodology.

Critically, Bryman and Bell (2003:25-26) suggested that qualitative research

methods can also be used to test existing theories. It is this more humble

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approach suggested by Bryman and Bell (2003) that the author used for the

research project.

Welman and Kruger (2001:33) in their book Research Methodology offered a

further resource to the author. They suggested that the literature review for a

dissertation required an extensive review to discover if the proposed research

had been previously published by another author. The author could not find any

previously published research that was identical to the author’s proposed

research project.

Welman and Kruger (2001:35) also proposed that there should be a mixture of

both primary and secondary sources of literature. The author attempted to

consult the primary sources where theoretical concepts were used, only

reverting to secondary sources to offer a perspective. The Welman and Kruger

(2001) resource was well structured and offered good explanatory guidance on

research methodologies to the author. Wainwright (2006) offered the author a

useful aid to defining the research questions and offering a perspective that tests

the author’s hypothesis.

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2.2 Management and Customer Service Theory Literature Review

The author was confronted by a wide range of literature from traditional literary

sources, to more contemporary evidence found online, regarding both

management and customer service theory. Within the dissertation proposal the

author had a potential of thirteen different sources of information. Undertaking

the research project allowed the author to be more selective and critical with the

literature available to him.

Michael Porter in his book Competitive Advantage: Creating and sustaining

Superior Performance discussed the core concepts of competitive strategy. He

stated that

‘...Competition strategy aims to establish a profitable position against the

forces that determine industry competition’ (Porter, 1985:1)

Porter (1985:4-10) demanded that a clear understanding of the

‘...five competitive forces that determine industry profitability...’ (Porter

1985:4-10)

Was required as an initial step to understanding the industry profitability,

because the five forces influence the prices, costs and investment required

within a particular industry. Porter (1985:5-70) argued that the strength of the

five competitive forces is a function of an industry’s structure. Porter’s book

Competitive Advantage: Creating and sustaining Superior Performance, Porter

(1985) and the earlier theories discussed in his earlier book Competitive

Strategy: Techniques for Analysing Industries and Competitors, Porter (1980)

were seen by the author as core to competitive advantage and strategic choice

theory. The author determined the five competitive forces for TVH see Figure 1

Porter’s Five Forces adapted for Twin Valley Homes within the Landlord Market

of Blackburn with Darwen. It was clear from an analysis of Figure 1 that due to

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low bargaining power of buyers, low threat of new entrants of a similar size to

TVH, low threat of substitution power and high levels of supplier power; that the

intensity of industry rivalry, and thus competitiveness was low. It was therefore

impossible to suggest that the original hypothesis by the author that the

environment was non-competitive was now be mistaken. Burns (2000) suggested

that triangulation is

‘...the use of two or more methods of data collection in the study of some

aspect of human behaviour’. (Burns: 2000)

The author suggested that the primary research undertaken allowed him to

triangulate his findings against the secondary research undertaken see 4.0

Primary Research Discoveries. There was quite clearly competition, but the level

of the competition as seen in Figure 1 was very low. However, TVH would need

to act at a strategic level to gain a competitive advantage over its remaining

competition, or to position itself in a position to be ready for changes in either

the external environment.

Critically, Recklies (2001) in her own article Beyond Porter: A Critique of the

Critique of Porter drew upon a paper published by Larry Downes, also named

Beyond Porter, and his ‘Three New Forces of Globalisation, Digitalisation and

Deregulation’ that had impacted upon the microeconomic perspective of Porter’s

Five Forces model. Recklies (2001) suggested that for an organisation to gain a

competitive advantage over its remaining competition, it needed to position

itself to be ready for changes in the global external environment, such as global

regulatory changes or global market opportunities.

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Figure 1 Porter’s Five Forces adapted for Twin Valley Homes within the Landlord Market of Blackburn with Darwen

Adapted from: The Free Press, Macmillan Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by

Michael E. Porter (1985)

Bargaining power of Buyers

Threat of new

entrants

Threat of Substitutes

Bargaining power of Suppliers

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Recklies (2001) stated that

‘Downes summarises that the role of information technology is the

foremost difference between strategy, in what he calls the Porter world,

and in the new world of the new forces.’ (Recklies: 2001).

She suggested that the old economy used IT as a tool for implementing change.

She then summarised her position by stating that she believed that the Porter

Five Forces model was still applicable and valid, yet the introduction of the

Downes Three New Forces added a dynamic macroeconomic perspective to

modern markets. Downe’s paper was published at the beginning of the 21st

Century and within the ‘dot com bubble era’ and as such was highly relevant for

this time in history. However his work became contemporary with the

deregulation of the banking sector and the 2008 global financial conditions, or

what has been known as the ‘Credit Crisis’ (Elliot: 2008), of the world banking

system in 2008 and the subsequent impact upon the global housing markets.

Downe’s new forces have pervaded every market including the car dealership

market, as seen by the effects made upon their market as described by Massey

(2008); and Wonnacott (2008).

Porter (1985:11-30) then suggested that an organisation should determine its

relative position within a market. Porter proposed that a ‘Competitive

Advantage’ can be gained through two different routes: Low Cost or

Differentiation. Porter then proposed that there are three ‘generic strategies’ for

achieving above average performance and thus competitive advantage. These

were cost leadership, differentiation and focus. Johnson, Scholes and

Whittington (2008:224-231) in their text book Exploring Corporate Strategy

suggest that there has been confusion about the categories that Porter (1980

and 1985) proposed with his generic strategies in both Competitive Advantage:

Creating and sustaining Superior Performance and Competitive Strategy:

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Techniques for Analysing Industries and Competitors. Johnson et al (2008:224-

231) suggested a different model that added clarity to the strategic options, by

citing a model that was adapted from Bowman and Faulkner (1995) in their book

The Essence of Competitive Advantage called ‘the strategy clock’. This model

was based upon

‘The principles that true competitive advantage is reached by offering

customers what they want better than the competition’ (Johnson et al,

2008:224).

The author used the strategy clock and adapted it to understand the current

strategic positioning of Twin Valley Homes within the marketplace in Figure 2

The Twin Valley Homes Strategy Clock Demonstrating Current Strategic

Placement and Competitive Strategic Options. Exploring Corporate Strategy has

therefore offered the author a useful resource to look at more contemporary

models that extract added value from management theorists such as Michael E.

Porter.

Figure 2 demonstrated that the author perceived TVH as having a hybrid

strategy; this was seen in the current three year strategy in Appendix D which

provided many differentiating strategic outcomes to customers including low

cost. Low cost was dictated by the nature of the market and rent regulation.

These facets of differentiation were fuelled by regulators requirements and

standardisation within the market place. Johnson et al (2008:230) suggest that a

hybrid strategy may be a

‘...Suboptimal strategy as it is a compromise between low price and

differentiation.’ (Johnson et al, 2008:230).

Porter (1985:16) stated that such an organisation may be

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‘Stuck in the middle...possessing no competitive advantage...usually a

recipe for below average performance.’ (Porter, 1985:16)

Given the fact of low competition within the market that TVH existed within,

such a strategic position would have allowed for survival and unremarkable

profitability. So what benefits would a different strategic positioning bring to the

Twin Valley Homes business? Johnson et al (2008:229) suggested that a broad

differentiated strategy based upon, perhaps, an excellent customer service to

provide a competitive advantage by offering a better service at either the same

price to ensure customer loyalty and thus greater profitability by

‘Extending the customer lifetime value’ (Johnson et al, 2008:229)

This could be accomplished by increasing customer loyalty as discussed by

Johnston (2001) in his research paper Developing and Sustaining a Reputation

for Service Excellence, to the Institute of Customer Services.

The key value of Customer Service in adding value to an organisation was central

to the research project. Without the added value derived by customer loyalty

and satisfaction as discussed in Developing and Sustaining a Reputation for

Service Excellence (Johnston, 2001) a differentiated strategy would not have

been worthwhile for Twin Valley Homes. Heskett, Sasser and Schlesinger (1997)

in their book The Service Profit Chain discussed a complex chain starting from

employee satisfaction leading to service value that resulted in increased

customer satisfaction and loyalty. This link was, again, reflected in Johnston

(2001) work Developing and Sustaining a Reputation for Service Excellence that

demonstrated the link between loyalty and higher profitability, and thus a

competitive advantage that provided a differentiated strategic direction. The

elements of the Service Profit Chain can be seen in Figure 3 The Elements of the

Service Profit Chain.

29

The book The Service Profit Chain introduced many concepts regarding the

operational perspectives of introducing their model, as seen in Figure 3, into the

workplace. However in their second book The Value Profit Chain, Heskett et al

(2003) expanded upon the customer lifetime value as central to repositioning the

way that an organisation thinks about what customers buy.

Heskett et al (2003:47) suggested that

‘Customers don’t buy services or products; they buy results as well as the

way that they are delivered...’ (Heskett et al, 2003:47).

This is in essence the value in which a customer perceives an organisation.

Heskett et al (2003) proposed that added value is what customers consider as

important. This relationship can be seen in Figure 3.

Porter (1985:33-61) in his book Competitive Advantage: Creating and sustaining

Superior Performance discussed how his model the ‘Value Chain’ and how it can

be used as a tool

‘...to examine all the activities a firm performs and how they interact ...for

analysing the sources of competitive advantage.’ (Porter, 1985:33-61)

Porter (1985:33-61) explained this by stating that

‘The value chain disaggregates a firm into strategically relevant activities

in order to understand the behaviour of costs and the existing and

potential sources of differentiation.’ (Porter, 1985:33-61)

In essence, Porter (1985) proposed again that a firm that has differentiated or

focussed better that their competition, gains a competitive advantage. The

author has identified and adapted Porter’s value chain with a Twin Valley Homes

perspective in Figure 4 The Twin Valley Homes Value Chain.

30

Figure 2 The Twin Valley Homes Strategy Clock Demonstrating Current Strategic Placement and Competitive Strategic Options

Adapted from: C. Bowman and D. Faulkner, The Essence of Competitive Strategy, Prentice Hall (1999)

4. Differentiation

6 2. Low price

8

3. Hybrid

1. No Frills

5. Focussed

Differentiation

7

High

Low

High

Pe

rce

ived

ser

vice

be

ne

fits

Price

Strategies Destined

for Failure

TVH

current

strategic

position

Author’s

suggested

strategic

outcome

31

Figure 3 The Elements of the Service Profit Chain

Adapted from: The Service Profit Chain, Heskett et al (1997:12)

Harrison and Van Hoek (2008:142) in their book Logistics Management and

Strategy suggested that generally within organisations, there was a shift towards

customer responsiveness, greater choice and improved customer value. Harrison

et al (2008:16-17) also stated that power had shifted from suppliers to

customers. The challenge for Twin Valley Homes is to become more responsive

to customers; to shorten lead times and express agility; reliable to reduce

inventory; resilient to be able to cope with the unexpected, and most

importantly to develop relationships throughout the supply / value chain. Porter

(1985:33-61) reflected upon this within Figure 4 The Twin Valley Homes Value

Chain. The service aspect seen within this adapted value chain is where the

author has investigated and compared with car dealerships in the research

project.

32

Figure 4 The Twin Valley Homes Value Chain

Adapted from ‘The Value Chain’, Porter (1985) Competitive Advantage: Creating and Sustaining Superior Performance

Shepherd (1998:20-44) in his article Understanding and Using Value Chain

Analysis published within the book Exploring Techniques of Analysis and

Evaluation in Strategic Management (Ambrosini, Johnson and Scholes),

proposed that value chain analysis is a

‘...framework for...structuring knowledge to provide an insight in to the

business...to show where value is created or destroyed, and so providing

the basis for an agenda for change.’ (Shepherd, 1998:20-44)

Shepherd (1998), then detailed how a detailed analysis provided the

aforementioned insight. This in-depth analysis has fallen out of the parameters

drawn up by the author for the research project, yet the author understands that

MA

RG

IN

33

given additional time and resources this detailed analysis of the Twin Valley

Homes value chain may provide an area for further research at a later date.

Critical of Porter’s Hypothesis of competitive advantage, Klein (2001) in his paper

A Critique of Competitive Advantage suggested that competitive advantage is

‘under-defined’ and may be at best described as ‘tautology’. Klein (2001) was also

critical in his conclusions stating that

‘Competitive advantage exhibits circularity, ambiguity, ontological

problems and subjectivity.’ Klein (2001)

He was very critical about the terminology of strategy and felt that strategy was

concerned with how firms ought to act, whereas competition is concerned with

‘...the processes that discriminate between the fortunes of different firms’

Klein (2001).

He therefore suggested that the critiques of the two issues are different and

should not exist together.

On balance, the theoretical evidence supporting competitive advantage was

compelling as there was so much supporting evidence from many of the

aforementioned literary sources. The author understood the tautological and

ontological arguments that Klein (2001) has discussed, however his argument did

not suggest another hypothesis to counter Porter (1980) and Porter (1985). The

author expanded on Porter (1980) and his generic strategies with the Bowman

and Faulkner (1995) and their strategy clock and also understood the extra three

forces suggested by Larry Downes cited by Recklies (2001).

34

It is, also, the area of customer care excellence that the author has investigated.

There were a plethora of literary sources available for secondary research

available to the author, so the author steered clear of the ‘airport lounge’ of

resources and focussed upon the academic orientated sources.

Stone and Laurie (1994:1-20) in their book Competitive Customer Care: a Guide

to Keeping Customers, believed that

‘...customer care depends upon how people treat people...and focuses on

organisational procedures, targets, responsiveness and management

support that are customer orientated.’ (Stone et al, 1994:1-20)

This customer care provided a value to the customer. Woodruff and Gardial

(1996:3-21) in their book Know Your Customer: New Approaches to Customer

Value and Satisfaction, suggested that

‘...If a company understands value from its customers’ perspective, ways

are found to deliver that value to their satisfaction to the benefit of the

company.’ (Woodruff and Gardial, 1996:3-21)

This concept that customer value was linked to organisational performance was

not new. Drucker (1954) in his book Practice of Management proposed that

‘...the customer’s perception of value plays a decisive role in business

performance.’ (Drucker: 1954)

Woodruff and Gardial (1996:3-21) proposed that a competitive advantage was

achieved by understanding and knowing customers more deeply than the

competition. Woodruff and Gardial (1996:3-21) suggested that the Japanese

Luxury car manufacturers such as Lexus (Toyota), Acura (Honda) and Infiniti

(Nissan) were successful in the USA against Mercedes, BMW and Cadillac

because they had applied a customer valued strategy that listened to customers

35

and gave the customer what they wanted. This customer value strategy can be

seen in Figure 5 A Process for Planning a Customer Value Delivery Strategy,

and is an adaptation of a model developed by Burns and Woodruff (1992:202-

216) in their paper Implications for Strategy Development and Implementation,

which detailed a process that an organisation could undergo for planning a

customer value strategy.

The flow detailed in Figure 5, demonstrated that the development of a close

relationship to customers allowed an organisation to organise, plan, implement

and market the value as a competitive advantage assuming that the customer

perceived a value that is above other suppliers. The values were individual to the

supplying organisation and the customer environment / market. For example in

Spector and McCarthy’s (2005) book The Nordstrom Way to Customer Service

Excellence, the authors detailed many examples of where customer value was

used to increase satisfaction, loyalty and profitability. One particular example

detailed by Spector and McCarthy (2005:72-74) was where Nordstrom stores

stock

‘...A wide and deep inventory of shoes.’ (Spector et al, 2005:72-74)

This was perceived by Nordstrom customers as a value. This organisational value

was usually communicated through advertising; however Nordstrom’s customers

actively promoted the company to their colleagues and friends. This offered a

competitive advantage of both customer service and enhanced stock holding to

Nordstrom over and beyond their competition.

Davidow and Uttal (1989:83-84) suggested three steps to develop an excellent

customer service strategy within their book, Total Customer Service – The

Ultimate Weapon. They stated that these three steps are as follows:

36

Segment and profile customers - as differing customers will have differing

service expectations.

Discover what the each customer segment expects or values – involve

customers in your solutions and find out what they like or dislike about

your competitors.

Set realistic customer expectations – then over deliver to them.

The author suggests that this simplified step-by-step procedure offers an

organisation a directive to understand and thus deliver extraordinary

value to their customers.

Figure 5 A Process for Planning a Customer Value Delivery Strategy

Adapted from Burns and Woodruff (1992), Delivering Value to Consumers: Implications for Strategy Development and

Implementation

Identify the

value

Choose the

value

Provide the

value

Communicate

the value

Assess the

value

Dire

ction

of Flo

w

37

From the evidence gathered from the aforementioned authors, the management

of customer relationships appeared to be critical in achieving customer value

achieved a competitive advantage. Payne, Christopher, Clark and Peck (1999:1-

17) in their book, Relationship Marketing for Competitive Advantage – Winning

and Keeping Customers stated that

‘Customer relationship marketing is...about moving people up the ladder

from new customer towards an emphasis on developing and enhancing

relationships.’ (Payne et al, 1999:1-17)

Payne et al (1999) also confirmed the customer value delivery strategy as

discussed by Burns and Woodruff (1992:202-216) and then formulated this into a

relationship chain. Payne et al (1999) went further when stating that customer

relationship management must

‘...plan and manage the moments of truth or the encounters with

customers that occur at every stage from the placement of orders to the

final delivery of...the service...’ (Payne et al: 1999)

Jan Carlzon (1989), the president of the airline SAS, first discussed the concept of

'Moments of Truth' in his book Moments of Truth. A moment of truth is any

particular point of time where the customer interacts with the products, systems,

people or procedures of an organisation, and makes a judgement about the

quality of the organisation itself or the products and services it provides. Each

moment of truth provided an opportunity to delight the customer and reinforce

the perception of the organisation as one that they like to do business with.

Conversely, each moment of truth provided a potential point of dissatisfaction

with the product or service received with the ultimate result that the customer

might be lost.

38

The moment of truth hypothesis required a particular organisational structure

whereby the frontline employees, the ones that interacted with the customer,

were empowered to take whatever steps are necessary to ensure customer

satisfaction in line with the overall goals and strategy of the organisation. The

role of management in such a system was to support and facilitate the frontline

staff in performing this role. Carlzon described this structure as a flattening of the

traditional pyramid of the organisation. He stated that

‘Any business organisation seeking to establish a customer orientation

and create a good impression during its 'moments of truth' must flatten

the pyramid - that is, eliminate the hierarchical ties of responsibility in

order to respond quickly and directly to customers' needs. The customer-

oriented company is organised for change.’ (Carlzon: 1989)

SAS used the moment of truths concept, together with a particular targeting of

the business traveller market, as the basis of their business strategy in the early

1980's at the time of the oil crisis. In the first three years of the strategy SAS was

able to increase the number of full fare passengers by 23% and discount

passengers by 7% in a stagnant market.

The term ‘moments of truth’ is important secondary research, and the author

reflected upon Carlzon within his findings /primary research. It is clear that there

was ample theoretical evidence and secondary research to demonstrate that

competitive advantage for customer service excellence existed within a

competitive environment.

39

2.3 Car Market Literature Review

The author was not overwhelmed by the amount of information readily available

regarding car dealerships. However, there were books available regarding some

car manufacturers and some contemporary evidence available online regarding

both car dealership satisfaction and what car dealership customer value was.

Mantle (1995) in his book Car Wars: The International Giants and the World that

they Made described the political history of global car manufacturers in the

second half of the twentieth century and sets in context how nationalism

became one of the catalysts for the growth of the global car manufacturers. This

literature provided the author with a context in which car manufacturers and

ultimately the dealerships inhabit and the immense rewards that are there for

those manufacturers that survive.

Magee (2007) in his book How Toyota became #1: Leadership Lessons from the

World’s Greatest Car Company, described how the unique Toyota culture, that

goes beyond Taiichi Ohno’s innovative ‘lean’ Toyota Production System, has

made Toyota the world’s greatest car company. Magee (2007: 92-93) described

how Toyota maintains an effective value relationship with its customers. He

stated that

‘Toyota owners realise that the vehicle they bought is worth more than

the ones they could have bought; the resale value is frequently higher and

the service bills are usually lower.’ (Magee, 2007:92-93)

Magee stated that Toyota does not communicate the value to customers through

traditional marketing routes but via word of mouth. Magee (2007:125) cited Jim

Press, the president of Toyota North America until 2007; he stated that his

customer focus message for Toyota was

40

‘Learn the customer, live the customer, empathise with the customer’.

(Magee, 2007:125)

In essence Toyota learned what the customer needed in all of its market

segmentations, to over deliver to them. This demonstrated Toyota’s customer

orientation, increased loyalty and derived profitability.

Killey (2004) discussed in his book Driven: Inside BMW, the most Admired Car

Company in the World, how BMW sought its own competitive advantage to

develop cars that are some of the most sought after in world. Killey discusses

that BMW developed a brand that was synonymous with style, driving pleasure

and exclusivity. This business model as Porter (1980 and 1985) described as a

focussed or focussed differentiated generic strategy. This meant that BMW

listened to its customers, but appealed to a narrower customer market than

Toyota or Ford, yet with high customer expectations.

In the Driver Power 2008-Dishing the Dirt on Dealers report in Auto Express

(2008) following a poll of 32,000 drivers there was some very interesting data.

Auto Express (2008) stated that

‘Dealers are the public face of a car manufacturer...the buck always stops

at the franchised garage.’ (Auto Express: 2008)

This simple quotation set the importance of the customer experience at a car

dealership. The car manufacturers, who may spend millions on new cars, may

find that their weak link within the service profit chain (Heskett et al, 1997) may

be the dealer who does not satisfy a customer. The report rated 30 different

manufacturers, franchised dealerships and then rated them on how they looked

after their customers. The best within the survey were Lexus, Skoda, Subaru and

Toyota. Customer’s comments on their service were as follows:

41

‘The staff are constantly willing to make time to discuss your

requirements...The whole experience is akin to visiting a top-class hotel

than a dealership...Always has the vehicle ready on time, valeted and fully

working...The phones are answered promptly...they keep me informed.’

(Auto Express: 2008)

The worst four manufacturer’s dealerships within the survey were Renault, Fiat,

Peugeot and Vauxhall. Customer comments on their service were as follows:

‘The wrong parts ordered again...Takes me for granted – staff don’t go

that extra mile to make your business feel appreciated...My dealer finds it

hard to sort out the car’s electrical problems as they are too complex! One

electrical problem has taken three years to resolve...If the fault does not

show up on the computer, the technicians haven’t a clue.’ (Auto Express:

2008)

This survey was available within a periodical that was easily accessed by the

general public and as such the impact may be far reaching. Although the survey

discussed issues with customers, there was no direct dealer perspective.

The author searched contemporary car dealership satisfaction reports online and

found that Motor Trader (1999) reported that

‘German brands have taken a dive in dealer satisfaction survey’

(MotorTrader: 1999)

This survey was undertaken in 1999 and reported that Japanese brands such as

Toyota and Honda had taken the lead over German brands such as Mercedes

Benz and Audi. However in a more recent report from Motor Trader (2007) Sue

Robinson, director of the United States National Franchised Dealers Association

suggested that manufacturers were starting to pay more attention to the needs

of their franchised networks. She stated that

42

‘It is encouraging that the results of this latest survey seem to suggest

that the manufacturer-car dealer relationship may be benefiting from a

little more balance’ (MotorTrader: 2007)

She also said that

‘At a time when the new car market is at its most competitive, every sale

counts and it will be those manufacturers that inspire confidence in their

networks that will perform best in this difficult climate.’ (MotorTrader:

2007)

There has been a huge change within the car dealership market and their

external environment with the introduction of changes to European competition

law in 2002, when the motor industry Block Exemption laws were reviewed. The

Automobile Association (2008) reported that

‘The original block exemption regulation permits the industry to operate

selective and exclusive distribution through franchised dealer networks

while safeguarding key consumer rights concerning the purchase,

maintenance and repair of vehicles.’ (The Automobile Association: 2008)

Since the 2002 review, the following changes were made

‘owners have been able to have their vehicles serviced and repaired by

independent garages without affecting the warranty (providing parts

matching original specification are used and the manufacturer's service

schedule is followed) and permitted multi-brand showrooms and helped

to achieve better price parity across Europe by facilitating cross-border

trade. Franchised dealers were no longer obliged to combine sales and

service/repair’ (The Automobile Association: 2008).

43

This has meant that franchised dealers had increased competition pressure from

non-franchised organisations. The author discussed the 2002 Block Exemption

review changes with dealerships that he was researching to see if customer

service excellence helped to leverage the additional loyalty to keep customers

from moving from franchises to independent dealerships.

CarPages (2007) reported that Jaguar dealerships in the United States were now

leading in customer satisfaction. Within the 2007 JD Power survey, Jaguar had

displaced the Japanese dominance of Lexus. It was clear that non-Japanese car

brands had discovered what customers valued. Although Jaguar had a focussed

generic strategy and narrower target customer demography, the increased

satisfaction may have made Jaguar a more appealing target when it was sold by

Ford along with Land Rover in 2008 to the Indian industrial giant Tata Industries

(O’Grady, 2008). Critically, O’Grady (2008) suggested that growing customer

satisfaction in Jaguar was due to the huge increases in product quality and

reliability have provided a potential to commercially exploit the brand.

From this literature review the author discovered that within a more competitive

car market, in difficult times, many car dealers were using the differentiating

value of customer satisfaction to derive a competitive advantage. The results

were remarkable re Toyota (Magee: 2007) and their growth; also Jaguar

(CarPages: 2007) and their sell off (O’Grady: 2008). Although the majority of

information taken from the literature review for the car dealership market has

been secondary in nature, the research project has offered a primary perspective

to the research project.

44

2.4 The Social Housing Market Literature Review

The Twin Valley Homes website (2004) provided the author a public perspective

of the organisation that he is employed by. It also provided a ten year corporate

plan of the organisation, which does not allude to Customer Service Excellence.

The report discussed the Twin Valley Homes customer involvement and the

importance it set in customer values. Then through the regulatory framework,

set by the regulating authority the Housing Corporation; it discussed how

services could be improved. Critically, the corporate plan in Twin Valley Homes

(2004) did not set a strategic direction for a competitive advantage in customer

service.

However, Twin Valley Homes produced a new three year strategy, Appendix D,

which described the organisation’s commitment to five new strategic aims.

Strategic Aim number 3 ‘To be recognised by our customers as a great service

company’, described how the organisation can develop excellent customer

services along with the increased commitment of staff. This became one of three

strategic directions ‘Looking after the People’. This clearly described that the

organisation viewed customer service excellence as an organisational strategic

direction. Unfortunately, the author suggested that the strategy falls short in its

clarity to produce a statement that competitive advantage would be seen by

delivering excellent customer service or any of the other two remaining strategic

areas: Managing the Assets and Supporting the Communities. This may be due to

the effect of regulation and standardisation described in the aforementioned

frameworks by (The Audit Commission, 2007) and (The Cabinet Office) by the

KLOE framework for inspection and the Charter Mark customer care standard

respectively.

The author was unable to find any research from his search that offers a

benchmarking comparison for Housing Associations and the car dealership

45

markets. It could therefore be said that the research work that the author

undertook was original in character. This could be perceived as a concern within

the sector, as this describes a possible malaise in the industry due to the lack of a

commercial strategic direction, as suggested by (Curmi, 2008) and (Vanguard,

2008).

46

3.0 Critical Evaluation of Research Methodologies

This chapter investigated the research methodology options that were available to the

author in order for him to research the research aim for this dissertation, ‘An Evaluation

of the Merits of Customer Service for a Housing Association’ and the associated

research objectives and derived questions in 1.1. The author determined a business

research strategy that allowed him to research the issue effectively. Essentially, the

author required to understand whether the research should be quantitative or

qualitative in character. Bryman and Bell (2003:25) stated that

‘Quantitative research...is a research strategy that emphasises quantification in

the collection and analysis of data...’ (Bryman et al, 2003:25)

And then contrasted this concept by proposing that

‘Qualitative research...is a research strategy that usually emphasises words

rather than the quantification in the collection and analysis of data...’ Bryman et

al, 2003:25)

Bryman et al (2003:3-30) then suggested that the research strategy should decide on

whether theory has guided the research as deductive approach, or whether theory may

have been an outcome of the research; as an inductive approach. The author then had

to consider epistemological and ontological issues.

Bryman et al (2003:3-30) stated that

‘...an epistemological issue concerns the question of what is...regarded as

acceptable knowledge in a discipline.’ (Bryman et al: 2003)

Heylighen (2000) suggests that Epistemology involves questions about the nature and

definition of truth. Heylighen (2000) stated that

47

‘Epistemology is the branch of philosophy that studies knowledge...It attempts to

answer the basic question: what distinguishes true (adequate) knowledge from

false (inadequate) knowledge?’ (Heylighen: 2000)

Heylighen (2000) also suggested that this allowed a methodology to evolve that

provided the development of a single theory from competing theories. There were

various epistemological positions: positivism suggested the application of methods of

research of ‘the natural sciences to the study of reality’ (Bryman and Bell: 2003).

Trochim (2006) stated that

‘Positivism is a position that holds that the goal of knowledge is simply to

describe the phenomena that we experience.’ (Trochim: 2006)

Realism was similar to positivism in that the approach to the research would be both

quantifiable and scientific in character (Bryman et al: 2003); interpretivism was the

opposite view to positivism, it was seen as qualitative in character, Neil (2006) stated

that interpretivism

‘...is a way to gain insights through discovering meanings by improving our

comprehension of the whole. Qualitative research explores the richness, depth,

and complexity of phenomena.’ (Neil: 2006)

Therefore epistemology is really concerned with the study of knowledge, and perhaps

truth, as Friedrich Nietzsche critically asked;

‘What is the true value of truth?’ (Friedrich Nietzsche Society, 2008)

The author examined the epistemological considerations for the research. As the

research was qualitative and was concerned with building a secondary theory that built

upon understanding a social members’ definition of a situation. Schwandt (1994:118)

suggested that the epistemological consideration would need to be interpretive. Bryman

et al (2003:16-17) suggested that an interpretive approach would relate to an anti-

48

positivistic approach; the approach would therefore be phenomenological in character,

as the research attempted to discover other people’s views. The Stanford Encyclopedia

of Philosophy stated that

‘Phenomenology studies conscious experience as experienced from the subjective

or first person point of view’ (Woodruff Smith: 2008).

The author also discovered the ontological considerations for the research. Ontology in a

social context was described by Bryman et al (2003:19-22), as whether entities within an

organisation exist or not. This was a fundamental philosophy discussed by Plato. Bryman

et al (2003:19-22) stated that there were two opposing ontological considerations;

Objectivism and Constructionism. The author suggested that as the research was

qualitative in method and as the phenomena under investigation were being

continuously revised by managers. This would oppose the objective view that the

phenomena have an existence independent from managers.

The research method was designed to discover how individual (or managers) interpreted

their situations, and had an ontological view i.e. that reality was a product of an

individual’s creation that constantly changed. The author previously stated that the

research was qualitative in theory, it tested theory (be deductive), but would be most

probably inductive by generating secondary theory. The epistemological orientation was

therefore interpretative and the ontological character was constructionist.

Riley et al (2001:38-39) proposed that the choice of research topic decided the

methodology of the research. The author’s topic /aim was about customer service from

an organisation’s point of view. The research was qualitative and was concerned with a

small number of manager’s opinions. The sample size for the research was therefore

relatively small. This would mean that a quantitative type of survey/questionnaire was

inappropriate for the project. The author suggested that the best methodology for the

primary research, which would gather opinion based information, was via semi-

49

structured interviews. Bryman et al (2003:119) stated that a semi-structured interview

was

‘...where an interviewer has a series of questions that are in the general form of

an interview schedule but is able to vary the sequence of questions. The questions

are also general in their frame of reference.’ (Bryman et al, 2003:119)

Critically, a qualitative approach using semi-structured interviews for primary data was

too subjective in nature. Bryman et al (2003:299-301) suggested that the data could be

difficult to replicate and repeat because the interview was unstructured. However using

quantitative survey techniques with many respondents would, from the author’s

perspective, not have discovered the feelings and personal attitudes of the respondents.

The essence of Customer Service was about attitudes and the human condition, so a

human approach that was qualitative in nature was the only method of research

available to the author. The author’s initial assumptions of non-competitive

environments required the use of ‘quasi-Nietzsche’ approaches to discover the truth or

the perspectives of truth from the respondents. The author was interested in his

perspective and potential shifts of perspective from the original hypothesis. A

positivistic, realism approach based upon a quantitative, statistical, deductive approach

would not have discovered this outcome.

The author determined that a small number of semi-structured interviews with different

car dealers that would relate to the aforementioned research questions and research

objectives was an appropriate methodology. The primary research was conducted by

just the author. The sample size was small, due to time constraints and the perception

from the author that there may be a high level of non-response from potential

respondents. There were also two semi-structured interviews with two members of the

Senior Management Team of TVH. The data was collected by the author to a timescale

that was described in the Gantt chart as seen in the dissertation proposal Appendix E.

Critically, Higgins (2008) also suggested that semi-structured interviews

50

‘...could have limited depth, poor response rates and a non-response bias.’

(Higgins: 2008)

The analysis of primary data used Grounded Theory, this meant that the ‘theory was

developed from the data', rather than the other way around. This was an inductive

approach, meaning that it moves

‘...from the specific to the more general’ (Neill: 2006) citing (Strauss and Corbin:

1990).

Saunders et al (1997, p349) and Riley et al (2001, pp105-106) suggested that Grounded

Theory is built up from observations from interview and that

‘The process is inductive...with theory emerging from the process of data

collection and analysis’ (Saunders et al: 1997)

The secondary data as suggested by Higgins (2008) should be able to triangulate findings

within the primary data collection and save time. Higgins (2008) critically discussed the

issues with secondary data; that there may be issues with the reliability and validity of

the data collected from the literature review, which forms the source of the secondary

data. The author proposed that using good triangulation with good reliable secondary

data has overcome the shortcomings of the small sample frame from the primary

research. The author used a variety of secondary data as can be seen in the literature

review.

A major consideration for the research methodology was the credibility of the research

findings. Saunders et al (1997:81-82) stated that good research design was critical in

improving the reliability and validity of research data. Saunders et al (1997:81-82) cited

Robson (1993) and made suggestions to the potential threats of research reliability:

subject error, subject bias, and observer error. In essence, Saunders et al (1997)

proposed that a phenomenological approach would suggest that that a similar

51

observation could be made by different researchers on different occasions, thus

reducing reliability.

Robson (1993) also suggested that the lack of research validity caused a threat to the

credibility of the research; he also stated that

‘...the major risks to validity are history, personal implications, participant

mortality and generalisability’ (Robson: 1993)

However Saunders et al (1997: 85) suggested that one of the greatest risks to data

analysis is that data interpretation was based upon inductive assumptions. The author

tried to overcome the dangers of assumptive interpretation by making viable, business

recommendations from the analysis of the results and then critically scrutinising the

results.

The author started the research by piloting his first unstructured interview with a

member of the Twin Valley Homes Senior Management Team, Catherine Proctor. Riley

et al (2000:43-44) state that

‘A piloting is useful in clarifying the effectiveness and relevance of questions

within an interview based research...it helps evolve a series of questions that

maximises opportunities for securing the views of respondents.’ Riley et al

(2000:43-44)

Catherine Proctor, the Head of Service Development for TVH, offered the author an

element of criticality. This allowed him to finely tune the questions used by the author in

the research, Appendix F. The pilot also allowed the author to practice good interview

techniques that he had discovered from Riley et al (2000:132-137). As can be seen in

Appendix F the number of questions was cut for the car dealership interviews, to ensure

for a quicker, more sector relevant interview.

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3.1 Significance, Limitations, Ethical Issues, Consent and Access.

The author suggested that the research will be of significance to Twin Valley

Homes in allowing them to show that there were strategic theories that the

organisation could apply within the organisation that would allow the

organisation to improve profitability. The research developed a competitive

advantage strategy that offered profit/surplus opportunity within a heavily

regulated, non-competitive environment. From using the information gained

from the semi-structured interviews, the organisation was able to learn and be

able to benchmark itself against a different market.

The limitations of the research were governed by time, consent and access to the

primary research sources. Although the author was given verbal consent to

interview key members of staff at a number of car dealerships, he was wary of

the fact that some ethical considerations may become relevant. Saunders et al

(1997) stated that

‘...the research design should not subject the research population to

embarrassment or any other material disadvantage.’ (Saunders et al:

1997)

As the research project probed into key strategic competitive concerns, there

was an initial reluctance from the primary sources to discuss these issues with a

researcher who was publishing his findings. This meant that the author employed

an element of diplomacy and emotional intelligence to gain both consent and

access for the research project. The author produced a standard letter, Appendix

G, that began dialogues with a number of car dealerships, however he found that

he needed to be a bit more assertive to try and get the interviews. The author

required a sample size that allowed him to interview a broad range of

dealerships. The potential and actual size of the sample can be seen in Table 1.

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The author found that by the use of non standardised semi-structured

interviews, that it added more flexibility and rapport with the interviewees. The

approach and methodology allowed him to probe more deeply where

appropriate. However, the time in front of the interviewee was still more

extended than expected, and the author was aware that there may have been

problems with interviewer bias. It was hoped that the interview times would take

about an hour, however one interview took over three hours to conduct. This

perception of time away from the interviewee’s business may have compromised

the potential of further interviews. The statements given by all respondents were

taken as the authority of the organisation that the respondents are representing.

Critically, another respondent may have a different perspective upon their

organisation. Given more time, the author would have interviewed other

members of the respondent’s organisation.

The author believed that he may have improved the reliability and validity of the

data by getting to know some of the interviewees prior to the interview, by

active listening techniques, by encouraging open flow of questions and by having

a comfortable open manner.

54

4.0 Primary Research Discoveries

This section allowed the author to describe what he uniquely discovered from the

compilation of his data extracted from the semi-structured interviews and thus formed

the basis of the author’s primary research. This primary data was presented in the form

of both tables and charts. This allowed for an analysis and synthesis of the primary data,

which provided a higher level confidence in the data rather than just reporting in prose.

A further benefit for this reporting style has allowed for greater objectivity by identifying

facts (as bullet points) and thus lower distortion in the truth.

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4.1 Evolution of the Research Sample

The author failed at obtaining interviews with Jaguar, Lexus, Toyota and BMW

dealerships. All these dealerships refused interviews as they stated that they

were too busy selling cars, or just did not contact the author. The dealerships

that agreed to commit to the interview told the author that they could see value

in beginning a two-way conversation with another industry. One of the

interviewees was also member of the Institute of Customer Service and had fully

subscribed to the concept of benchmarking outside of the car market. A

description of what happened when determining the sample size can be seen in

Table 1 below. This table presented the evolution of the car dealership sample

for the project through limited consent. As access and consent was not an issue

for the author’s organisation, these were not included in the table. The

responses were given the ‘traffic light approach.’ This means that a green

response is ‘go’, and a red response means that the dealership refused access.

Table 1 Car Dealer Sample Evolution for the Research Project

Car Dealership Response

Ford Retail Letter, subsequent emails and interview

Bowker BMW Letter, face to face contact, broken promises, ‘too busy.’

Stratstone Jaguar Letter, telephone contact, ‘too busy selling cars.’

Perry Mazda Letter, email, face to face contact, interview

Lexus Manchester Letter, face to face contact, ‘too busy selling cars.’

Greenacre Honda Letter, face to face contact, many telephone calls, further face to face contact, interview.

Vantage Toyota Letters to 2 dealerships within East Lancashire, subsequent visits and broken promises.

Table 1 demonstrated a reasonable success rate with the author having

successfully ‘recruited’ car dealerships for semi-structured interviews. However,

56

more critically, the table also highlighted the access issues confronting the author

as he tried to conduct the research project. Key impacts from the evolution of

the sample included: loss of time and subsequent time drift of the research

phase (Appendix E) and an understanding of the commercial and external forces

involved within the car dealership market in 2008 which meant that the car

dealerships the author had tried to recruit for a semi structured interview, may

have had more pressing issues to hand. The issues that related to this area of

concern were highlighted within 1.3 The Contextual Environment for the

Research Project

The author picked a very difficult period of time for car dealerships to respond to

a request for research due to the difficult financial environment in 2008. This was

reflected in some of the responses that were collected from the dealerships, in

particular Greenacre Honda Table 3 Results of the Car Dealership Semi-

Structured Interviews. The interviewee, Paul Rushton (Sales Director) was very

rushed and looked under extreme pressure to meet his sales targets. His

responses were all sales orientated and he appeared to have little patience with

the subject, even though he stated that he understood the subject area.

Greenacre Honda’s responses were of marked quality difference to both Mazda

and Ford. The Greenacre Honda responses did not appear to have demonstrated

a strategic understanding of the subject area that the interviewee professed to

understand. The author has therefore used the responses as they have been

given, however the reader should be aware of the difficult trading conditions

that may have tempered Rushton’s responses.

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4.2 Interviews with Twin Valley Homes

A discussed in 3.0 Critical Evaluation of Research Methodologies the author

interviewed Mrs. Catherine Proctor, the Head of Organisational Development for

Twin Valley Homes, to pilot the research. Some changes were made to the

questions following the semi-structured interview; however it was suggested by

Mrs. Proctor that the following recommendations were implemented by the

author:

To involve Mr. Ian Bell, the Head of Housing, within the semi-structured

interviews as there would be additional value as he is the author’s line

manager and thus has an organisational strategic direction.

To ensure that the interview questions were industry specific and could

be clearly understood by the target audience. This would be because

housing sector or management jargon may not be understood by the car

dealership market.

Reduce the length of the survey to maximise the impact.

Following the interview with Mrs. Proctor, the author interviewed Mr. Bell. The

author has compared and contrasted the Twin Valley Homes interviews in Table

2 Results of the Twin Valley Homes Semi-Structured Interviews

By undergoing interviews with these two key members of the Twin Valley Homes

(TVH) senior management team, the author gathered sufficient knowledge to

have understood some of the strategic directions of the organisation.

The questions in the tables were paraphrased and referred to the full questions

that can be found in Appendix F.

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Table 2 Results of the Twin Valley Homes Semi-Structured Interviews

Question Proctor’s Response Bell’s Response

1. What influences does Prospect Homes have with the TVH business?

Gradually increasing strategically.

Currently low level operationally.

Very low

Starting to set the strategic framework

2. What are the influences of regulation in your market upon customer service?

Standard service to all

Difficulties in rewarding good customers

Regulators encourage risk minimisation, thus leading to appeasement of customers.

Currently massive

Clarity that the TSA will have ‘teeth’

Regulators looking for customers to be central in developing/improving services

3. What other external forces have had an influence on customer service?

Customer Loyalty Schemes

External Awards for Excellence

Independent Surveys

The inspection / audit regime from The Audit Commission and others such as Charter Mark

Funders such as Banks especially during the current ‘credit crisis’

4. What influence have satisfaction surveys had in improving customer service?

Business planning process

Staff improvement

Vital to moving the business forward

Surveys have driven forward customer environment changes

Broadened the mission of the organisation to encompass the environment

Improved key customer contact areas like repairs

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5. Does TVH see customer service as a strategic function for the business?

Yes

Would employ a head of Customer services if resources allowed

Yes

6. What are the barriers to achieving excellent customer service within the organisation?

Hierarchical issues (Job descript. Etc)

IT systems

Training

Lack of people management skills

Resources

The culture of some people within the organisation

7. What other aspects of the value chain could offer additional value to customer satisfaction?

IT system / CRM

Business information

Speed, agility and responsiveness of the value chain to the customer

Greater customer intelligence through IT

Keeping in touch with customers throughout our process

8. How does the business demonstrate to its stakeholders that TVH is serious about customer service

Technical and behavioural competencies

Induction

Strategy / project groups

Code of conduct

Service Standards / performance management framework

Our Strategy is customer centric

Our Outcomes

Communicating and marketing our outcomes effectively to both regulators and funders

9. On a scale of 1-5 how important is customer service to the success of your business?

5

TVH is a service company

5

Business critical ‘what if we don’t!’

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10. Which other organisations do you perceive as market leaders in customer service?

TNT

First Direct

John Lewis Partnership

Bromford Housing

John Lewis Partnership

Virgin Atlantic

RAC

11. How do you think these organisations have enabled customer service to give them a competitive advantage?

Investment into knowing and understanding their customers

Consult with customers at every opportunity

Train staff extensively

By sustaining a cultural shift within their organisations to become more customer centric

12. How do you (TVH) provide a customer service better than the competition?

Good Competitor intelligence

Invest in training

Understanding our customers

Embedding a ‘friendly face’ culture

Measuring then improving continuously

Getting closer to our customers

Ensuring that our culture is better

13. Can TVH offer a competitive advantage in customer service within the non competitive environment of social housing?

No, if the environment is non competitive.

However that would depend on your perspective

Yes, I feel that we are in a competitive environment

We must provide excellent customer service as we are a big stakeholder in the community

14. What other areas in TVH do you see a competitive advantage?

Anti Social Behaviour

Surveying

‘Back Office’

Property/Housing Development

Environmental services

Repairs

15. What controls, measures and management do you currently implement that allow customer service to

Continual surveying and checks

Regular audit of key processes

Customer satisfaction forms part of the performance management framework

Service Standards – widely publicised, customer centric and continuously improving

Policies

Part of the performance management

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excel within the business? Customer service forms part of the competencies measured in staff appraisals

framework

Staff incentives

Board champion for customer service

16. What controls, measures and management could you implement in the future that allows customer service to excel within the business?

Better rewards to staff

Improve customer contact environments

Improve all measurements of customer services to allow customer led improvements to happen

External accreditation of customer services

Improve customer intelligence

Allow Neighbourhood Officers to become the helpful face of the organisation.

Increase staff incentives (although limited by Housing Corporation Regulation)

Consider penalties for staff / teams that are not customer focussed

Better promotion of customer focus within the ‘employment package’ so that we actively recruit on customer service.

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4.3 Interviews with the Car Dealerships

As discussed in 1.3 The Contextual Environment for the Research Project and

4.1 Evolution of the Research Sample the author interviewed the following car

dealerships:

Greenacre Honda a small single manufacturer, franchised dealership

based both in Clitheroe and Blackburn, Lancashire.

Perry’s Mazda, a larger multi manufacturer, franchised dealership based

within Blackburn, Lancashire.

Ford Retail wholly owned by Ford. Ford has a number of high profile

dealerships in the major towns/hubs in the UK who were in competition

with smaller non-owned Ford franchises. This offered Ford greater control

and financial return in Ford Retail.

The author placed his findings below in Table 3 Results of the Car Dealership

Semi-Structured Interviews.

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Table 3 Results of the Car Dealership Semi-Structured Interviews

Questions Ford Retail Perry’s Mazda Greenacre Honda

1. Tell me about the business relationship that you have with the car manufacturer.

Highly Bureaucratic

‘Working for Ford is like working in Government’

Very close

Close

Easy to deal with

Mazda UK are a small, young and dynamic organisation

All about sales targets

About squeezing more value from the customer e.g. FSA influence – selling insurance, credit etc

2. What influence does the car manufacturer have with your business?

High levels of control (service standards, look of dealerships)

Set our business objectives

Highly tolerant regarding targets

Enabling with performance bonuses

Some influence

They mystery shop us.

3. What has been the influence of regulation upon offering customer service within your market?

European Block Exemption has given the manufacturer more power over the dealer

Block exemption has improved customer standards, but at a cost

FSA regulation and accreditation has improved customer service professionalism, by increasing standards

Block exemption legislation means that we need to keep selling cars and service for cars

4. Are customer satisfaction surveys seen as important by both manufacturer and dealership?

JD Power and external surveys are not viewed as important to dealerships, seen as important to the manufacturer.

Hugely important in creating a customer demand and brand identity.

The halo effect from good

No

Staff training more important

Making sure that we are FSA trained and

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surveys gives a competitive advantage

compliant so we can sell is more important

5. Other than sales targets, does the manufacturer set other key performance indicators for your business?

Staff Training

Customer Satisfaction – if this KPI is not consistently met the penalty could mean loss of franchise.

Service standards compliance

Customer satisfaction

Customer service is a key performance indicator and part of our bonus

6. Do you see customer service as a strategic function to your business?

Yes, always been a strategic function

Will become more important as it is a key differentiator of strategy as external environmental pressures such as block exemption affects marketplace.

Yes, paramount to the survival of Perry’s

Allows us to get more customer loyalty

We have a people focussed plan that includes staff and customers

We just need to sell more cars to our customers.

Customers know that they want a Honda when they walk in.

We care

7. On a scale of 1-5 how important is customer service to the success of your business?

5

Challenge to move from short term targets to longer term customer satisfaction and loyalty ‘Customers for Life’

The level of bonus linked to excellent customer service is very high and allows the business to become more profitable

I am the Customer Service

5

Currently 98.6% of customers are completely satisfied with their new car

We employ a customer relationship manager (Katie)

5

But selling cars and making a profit is more important

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Director, so I have a strategic mandate

8. If so, how do you provide a customer service that is better than your competition (Do you have a strategy? How are you implementing that strategy within your business?)

Current Strategy is named ‘Moments of Truth’ see Appendix H.

We use the concept of Net Promoters to benchmark performance outside of the industry

Use Neuro linguistic Programming to help with the sale

Use ‘Train to Gain’ government training to provide staff with NVQ qualifications in customer care.

Members of the Institute of Customer Service thus proving a commitment to service excellence

We know our customers – we understand that 90% of our transactions are cash based

Better leadership

Our staff are people focussed

Getting it right with our customers

We continually monitor our customers

Customer intelligence is crucial

We want our customers to come back

9. What other areas of your business do you see a competitive advantage over your competitors?

Product Design

Product Excellence

The driving experience. ‘drive of your life’

The emotional experience

Enhanced customer experience by managing the customer journey

Product Design

‘Zoom Zoom’ driving emotion

Customer responsive supply chain – getting the right product to the customer quickly

Excellent IT links with

Our sales staff are nice people

We have a nice relaxing environment

We offer the customer a pleasurable experience in our dealership

We manage our

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Mazda UK customers’ expectations carefully to get the sale

10. What controls, measures and management are you currently implementing that allow customer service to excel within your business?

Mystery Shopping

Satisfaction tracking (completely satisfied)

Dissatisfaction tracking

Excellent complaint handling

Making use of ‘white space’

Standardising good practice

Objective customer satisfaction questionnaires via an independent 3rd party, Ford now using the same model

It’s part of the bonus so it’s a big carrot!

Staff targets

We have a strong ethical context of trust; staff and customers trust us.

11. What measures and resources are you looking to implement in the future to allow you to gain a competitive advantage in your business?

Providing objective customer satisfaction questionnaires via an independent 3rd party.

Move to telephone surveys to offer immediate impact of the customer experience via dealership

Start to use regular data cleansing of databases via Experian, thus giving a more accurate picture of customer prospects.

Improve Customer Relationship Marketing

More emphasis on the product (design and driving experience)

We will be looking to train our staff up better so they become very close to our customers

Improving our showroom environment and customer facilities

Honda UK will conduct mystery shopping instead of us

Better more robust databases that allow us to profile our customers better.

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4.4 Analysis of Primary Research

The author linked the answers to the findings seen in both Table 2 Results of

the Twin Valley Homes Semi-Structured Interviews and Table 3 Results of the

Car Dealership Semi-Structured Interviews with the original conceptual

framework of the research project are found in 1.1 Defining the Issues behind

the Research Project. To increase the clarification of the primary research

findings to the conceptual framework, the author placed the analysis into a table.

The author then finally compared and contrasted with the Twin Valley Homes’

interviews from Table 2 and car dealership interviews in Table 3. The primary

research analysis can be found in Table 4. This was then distilled into the

conclusions that were discussed in 5.0 Conclusions.

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Table 4 Analysis of Primary Research against the Conceptual Framework

Research Objective Primary Research Discovery Car Dealership

Twin Valley Homes Good Practice / Learning

What areas of competitive advantage exist for Car Dealerships / Twin Valley Homes?

Customer service and an enhanced customer journey

Both Ford Retail and Perry’s Mazda said that the product offered an advantage (design, the emotion it provides a customer, the emotive connection to the brand)

Perry’s Mazda suggested that good industry surveys such as JD Power provide both the dealer and manufacturer with a ‘halo effect’ that provided them with an advantage over other dealers.

Pleasant environment for customers

Customer responsive, quick and agile supply chain

Customer Service – however perception and perspective of the competitive environment is crucial

Anti Social Behaviour

Property development

Repairs

Back Office

How important is customer service within the competitive strategies employed by car dealerships / Twin Valley Homes?

Key competitive strategy for most (Greenacre Honda could not see a strategic connection)

Ford Retail and Perry’s Mazda employ a Customer Services Manager at a senior management level within their business.

The financial potentials and penalties are high for customer

Key to the organisation

Within the strategy of the organisation (Appendix D)

Would employ a Senior Manager responsible for customer service if resources allowed

Part of the performance management framework, however the rewards are lower than car

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service thus demanding importance

Ford Retail and Perry’s Mazda recognise the link between good customer service and increased loyalty of customers and have moved strategically to allow this to happen. Greenacre Honda was more operational in their outlook yet saw merit in customer relationships.

dealerships. No penalties for poor customer satisfaction.

The internal/external factors that influence customer service within car dealerships / Twin Valley Homes

All car dealerships reported that European legislation (Block Exemption) has and would affect their businesses. They all saw that better customer relationships as key to customer loyalty, but at a cost.

Perry’s Mazda and Greenacre Honda identified that the regulation brought in by the FSA (Financial Services Association) has increased professionalism within their organisations.

Ford Retail and Perry’s Mazda stated that they had close working relationships with their principal manufacturer although the Ford was more bureaucratic and prescriptive with the dealership. Mazda appear to be more enabling, tolerant and dynamic in their relationship with

Independent surveys

External awards for excellence

Inspection / Audit regime and associated bureaucracy.

Regulation and Standardisation within the Social Housing sector

External funders to the organisation

Customer led philosophy from regulators

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the dealership. Honda appeared not to have as much influence on the dealership and the influence were not greeted with enthusiasm.

What management tools are implemented to improve customer service within car dealerships / Twin Valley Homes?

Mystery shopping was employed by Ford and Honda upon the dealerships; but not Mazda. Honda conducts the mystery shopping on dealerships to avoid bias.

All dealers saw the importance in trained, customer centric staff at the front end of their businesses.

Greenacre Honda places a great deal of importance on trust and strong ethics.

All organisations used satisfaction surveys; however Mazda and Ford Retail are starting to become more objective with their methodologies when capturing this data to avoid bias. They are also using telephone surveys to get quicker data, so dealership response to negative customer experiences can be quicker and more effective.

Bonus payments to the dealerships are common

Ford Retail use benchmarking outside of their own industry via Net

Service Standards

Enforcement of policies

Use of the performance management framework

Continuous objective surveying

Regular audit of key processes

Mystery Shopping

Staff incentives

Part of the staff competencies

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Promoters to track progress

Ford Retail places a massive importance on staff training on ensuring staff use the right techniques and emotional connections to increase satisfaction.

Ford Retail also tracks dissatisfaction to give a deeper perspective to their satisfaction figures.

Ford Retail ensures that continuous customer communication drives forward complete satisfaction, by managing ‘white spaces’.

All organisations have segmented and profiled their customers. Ford Retail regularly ‘cleans’ their customer data through a third party. All organisations use a CRM system to allow them to understand their customers better.

Perry’s Mazda stated that strong leadership allowed them to improve customer service

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5.0 Conclusions

The author made the following conclusions (answers to the research objectives), that

were linked to the primary research conducted within the research project in Table 2,

Table 3 and summarised within Table 4 Analysis of Primary Research against the

Conceptual Framework and the overall research aim; ‘An Evaluation of the Merits of

Customer Service for a Housing Association.’ The secondary research was used by the

author to provide triangulation.

i. To identify what areas of competitive advantage exist with car dealerships -

The majority of the car dealerships interviewed also stated that customer service

was a strategic function to their businesses. Greenacre Honda saw customer

service as very important to their business, but they could not see a strategic link.

Twin Valley Homes (TVH) respondents saw Customer Service as a strategic

function that added value within their business. Secondary research also

demonstrated that car dealerships and car manufacturers see customer service

as a source of competitive advantage.

ii. To determine what importance customer service is to the competitive

strategies employed by car dealerships - All the car dealerships suggested that

through an emotive link with their customers via the product, and the pleasant

facilities that they service and sell their product in, a competitive advantage is

derived. Perry’s Mazda stated that because of their very close relationship with

the manufacturer and the convenience of their IT systems, they have exploited a

swift, agile supply chain for their customers for the benefit of their customer i.e.

the right product at the right time. Ford Retail named their current customer

service strategy ‘Moments of Truth’ (Carlzon: 1989). TVH stated that there were

many strategic functions that may offer a competitive advantage. This suggested

the hybrid strategy that was described within Figure 2 The Twin Valley Homes

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Strategy Clock Demonstrating Current Strategic Placement and Competitive

Strategic Options and Porter (1985). This strategic choice may provide the

customer with lower perceived service benefits at a lower cost than the

differentiated, customer service strategy exhibited by the car dealerships

interviewed.

iii. To explore the internal and external factors that influence customer service

within car dealerships - All the car dealerships interviewed suggested that

European legislation re Block Exemption (The Automobile Association: 2008)

introduced more competition within the car dealership market and also gave the

manufacturer more power over the dealership. Greenacre Honda and Perry’s

Mazda state that the introduction of the Financial Services Authority (FSA)

regulation into the conduct of their sales people selling financial products to their

customers had made their service provision more professional. Ford Retail and

Perry’s Mazda stated that they had close working relationships with their

manufacturer principal, ranging from bureaucratic to enabling. Both

organisations stated that the incentives and the penalties from the

manufacturers were large. Greenacre Honda suggested this possibility

particularly with sales volumes. The TVH relationship with their regulators is

similar to that of that of Ford Retail with that of Ford, Detroit; bureaucratic with

prescribed standards. However the strategic clarity of customer service was far

clearer with Ford and Mazda when compared to the ‘mixed messages’ described

by TVH respondents and Vanguard (2008) coming from the regulation and

inspection regime. The over regulated Registered Social Landlord (RSL) sector

ensured that Housing Associations such as TVH continued to have less effective,

hybrid strategies as described earlier within Figure 2. Interestingly, both Ford

Retail and Greenacre Honda described that external consumer surveys such as JD

Power were not viewed as important to them. They believed that this was of

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more concern to the manufacturer, thus suggesting that it is the manufacturer’s

responsibility to deal with the consumer demands from such surveys. Perry’s

Mazda saw a huge competitive advantage in a positive consumer survey i.e. the

power of the survey to influence the purchase decision of prospective customers.

Overall, it appeared that there was a strong element of influence on the

dealership market however the influences were commercial and linked to

competition and customer protection. The Government regulation within the RSL

sector did not allow for a commercial, strategic approach for RSL’s. RSL’s were

locked into standardisation which was counterproductive to the RSL.

iv. To discover what management tools are implemented to improve customer

service within car dealerships - All car dealerships used customer relationship

software to link within their customer databases. This allowed them to

understand their customers better and thus service their needs better. There was

an understanding that satisfied customers were loyal customers; so sustaining

customers was paramount. All organisations continually monitored and assessed

their satisfaction with customers by surveys. Some dealerships were taking a

more objective view to surveys by employing third parties to undertake the

surveys by telephone thus improving the objectivity and reducing the bias of

previous survey methods; TVH were currently doing this. Ford Retail tracked

dissatisfaction and have a complaints system that increased satisfaction by

allowing complaints to drive forward customer satisfaction and service

improvements and ‘mainstreaming’ the improvements into customer standards.

Perry’s Mazda stated that the implementation of customer satisfaction as a

major bonus and penalty to their staff helped develop a positive customer

service. Ford Retail used every opportunity to communicate to its customers

during the sales or service procedures thus improving satisfaction. This process

control and engineering made use of the empty ‘white spaces’ in between

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traditional contact. Ford Retail also understood the emotional value of customer

satisfaction. Heskett et al (1997 and 2003) suggested that Customer service adds

enormous value and strategic importance to an organisation and the process as

described by Ford Retail. Woodruff and Gardial (1996) also suggested that the

processes and targets of an organisation should be customer focussed to allow

excellent customer care and loyalty to occur. Payne et al (1999) went further and

stated that customer relationship management must

‘Plan and manage the moments of truth or the encounters with customers

that occur at every stage from the placement of orders to the final

delivery of...the service...’ Payne et al (1999)

Carlzon (1989) suggested that the process of encounters allows for ‘moments of

truth’ a concept that describes the Ford Retail customer service strategy. Process

engineering of the customer journey would therefore be critical to ensure that

the policies and moments of truth have a value to the customer. Also see

Appendix H.

v. To compare and contrast the research objectives with Twin Valley Homes to

discover if there is a strategic advantage with the application of competitive

strategic frameworks within a non-competitive environment - TVH respondents

stated that a personal perspective was central to understanding the competitive

environment that TVH exists within. This meant that upon examination of Figure

1 Porter’s Five Forces adapted for Twin Valley Homes within the Landlord

Market of Blackburn with Darwen, there was competition; however the

intensity of the rivalry was very low. The main competition, albeit low, came

from the threat of substitutes; in particular, private landlords. Therefore the

original perception of the author was incorrect and that competition theory

suggested by Porter (1985) was valid. It appeared that the regulation within the

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RSL sector was very heavy and meant that RSls like TVH must become masters of

all strategic outputs determined by the regulatory authorities. This regulation

thus stunted strategic opportunity within the sector and allowed for a

standardised product without the added benefits. There was a strategic

opportunity to have provided customer service excellence to TVH customers

(Porter: 1985). This would have improved the loyalty of customers (Johnston:

2001) and thus added sustainability to the TVH customer base. The competitive

advantage would be that advantage over the private landlord base and what

little other RSL activity that existed within Blackburn with Darwen. This

advantage would have allowed the TVH brand to grow within the Borough / area

of organisational operation and allow perhaps other areas of strategic

competitive advantage to evolve and further differentiate Twin Valley Homes.

Recklies (2001) suggested that Downes’ New Forces would also be important in

the 21st century. The ‘Credit Crisis’ and the increased demand for social housing

have demonstrated how the new macroeconomic forces of globalisation have

catalysed this effect upon TVH’s market. For Twin Valley Homes to take a

strategic direction following customer service, they would be taking a

differentiation strategy Porter (1985: 11-30). Figure 2 The Twin Valley Homes

Strategy Clock Demonstrating Current Strategic Placement and Competitive

Strategic Options also described where and how the author views the advantage

for Twin Valley Homes strategic future. Johnson et al (2008:230) suggested that

Twin Valley Homes current hybrid strategy as ‘suboptimal’ (see page 24).

In addition to the Twin Valley Homes conclusions noted above the author has made

the following conclusions on the research process.

i. Ontology – The research process enabled the author to determine

categorically that the author’s and interviewee’s interpretation of the reality

or truth of the original theory of non-competitive environments were

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different and have arisen as social phenomena. As suggested by the author in

3.0 Critical Evaluation of Research Methodologies, the ontological character

of the research approach worked well as constructionist. This was reflected

by the view of reality as proposed originally by Plato and latterly by Nietzsche

cited by the Friedrich Nietzsche Society (2008) with regards to discovering the

truth and that reality is a product of an individual’s creation.

ii. Epistemology – The author suggested in 3.0 that epistemological orientation

of the research project was interpretative as Competitive Advantage and

Customer Satisfaction were constructs that were used to make sense of social

actions. Therefore this anti positivist view would mean that the research

process allowed the author to take a phenomenological view of the

outcomes, in essence by investigating the views of the interviewees and using

them as the primary data to triangulate against the secondary theories.

iii. Methodology - The methodological approach was inductive and qualitative in

character. The approach clearly tested existing theories, but because the

authors original ontological interpretations were wrong; new theories were

not deduced. Although the sample size was initially going to be small, the

author did not expect it to be as small as it was.

The validity and reliability of the data was tested through the grounded

theory framework, in particular via the constant comparison with the

secondary data. As the quantity of data was smaller than expected so the use

of coding, perhaps using coding software such as ‘Atlas t.i’ would have been

inappropriate. The use of Boolean algebra in the form of qualitative

comparative analysis was considered and then discarded due to knowledge

and time concerns. Therefore with a larger sample and more in depth

78

knowledge the author would have considered other ways of analysing the

qualitative data. However the author believed that the data presented itself

in a straight forward manner that easy conclusions have been made. Bryman

et al (2003) the presentation of the data in chunks as seen in Table 2 and

Table 3 may have caused issues with the reliability of the data, however it has

suited the research project by:

Capturing the complexity of the issues

Helping the author to develop his theory in an area of comparative

study

Putting relevant organisational context into the well established field

of competitive theory.

Critically, as suggested by Bryman et al (2003: 434), grounded theory did not

result in new theory. The approach pertained to the social phenonomena

observed through the interviews and which were being researched.

79

6.0 Recommendations

The author examined the conclusions in 5.0 Conclusions and suggested a number of

recommendations below that were discovered from both the primary research and

triangulation with the secondary research. Above all the recommendations were

commercial in nature and may have proved difficult to employ within the public

perspective of organisational culture, regulatory environment and inspection regime.

i. Primarily, Twin Valley Homes should evaluate their future strategic direction very

carefully. Their current strategy, Appendix D, comprised of a number of strategic

directions for the organisation. Compounding this is the evolution of the

‘umbrella group’, Prospect Homes, which may have its own strategic direction.

These strategic outcomes may prove to be confusing to staff who deliver the

strategy. Critically, Porter (1985) and Johnson et al (2008) suggested that

organisational strategic direction and competitive advantage should be clear to

avoid confusion. The organisation considered itself to offer a ‘cheap and

cheerful’ low cost solution to housing; a hybrid strategic direction (Johnson et al:

2008), offering suboptimal returns. Theorists such as Porter suggested that a

generic strategy of differentiation would lead to a competitive advantage. The

author suggested that a differentiated strategy focussed upon customer service

excellence would provide a competitive advantage that would allow both higher

returns and increased loyalty (Johnston: 2001). The majority of the car

dealerships interviewed along with the senior management team members of

TVH saw a competitive advantage in excellent customer service. Critically, car

dealerships viewed value added processes that add value to customer service (as

supporting the main strategic direction), whereas TVH see diverse strategic

directions such as property development and back room services as additional

strategic directions. The author therefore suggests above all TVH need strategic

focus to allow the benefits of a differentiated strategy based upon customer

service to flourish.

80

ii. TVH carefully evaluate the organisational branding to both the reality and the

proposed strategic direction of differentiation. A ‘no frills brand’ Figure 2 The

Twin Valley Homes Strategy Clock Demonstrating Current Strategic Placement

and Competitive Strategic Options would mean that the customer would be

perceive lower benefits from the organisation. The organisation should think

carefully about branding the organisation. The branding should match the

organisation’s strategic direction. Customer Service would offer higher value to

the customer.

iii. The product (The property/home or environment) should become central to

associating the values of customer service with the customer. Excellent product =

Excellent Service. BMW, Ford and Mazda have used driving the product as

central to branding their product. This emotional experience sets a value with the

customer.

iv. TVH continue to use third party surveying to offer an objective appraisal to

customer satisfaction throughout the organisation as all car dealerships are

starting to perform.

v. TVH identify the customer perspective within all the processes that it employs.

This will add significant value to the customer as suggested in 5.0 Conclusions.

This will also allow the organisation to manage the ‘white spaces’ and discover

the Moments of Truth (Carlzon: 1989), thus adding satisfaction. This could be

done by combining lean Toyota Production System philosophy (Magee: 2007) via

‘kaizen’ and the control of waste within the system; and then combining the

customer aspect to this. This would allow the organisation to understand the

areas of customer value and potential ‘white spaces’ and allow the organisation

81

to exploit them. The analysis would be in the form of flow charts that would

allow the organisation to identify aspects within the value chain.

However, the author forecasts the potential for ‘strategy clashes’ at TVH and

other RSLs, as the Housing Corporation, who regulate the industry, require highly

efficient supply chains to respond to a functional product and offer ‘Best Value’.

Twin Valley Homes departments should also apply efficient supply / value chains

where there is a predictable demand; however this cannot apply strategically

across the organisation as there would be a mismatch of generic strategy as seen

in Figure 2. This is a new hybrid model, which the author has adapted from Fisher

(1997) and Porter (1985: 39). This unclear message from the sector regulators

has a confusing effect and can manifest itself as organisations being unclear

about their core competencies. They are measured by a huge amount of Key

Performance Indicators that measure everything and do not all link back to the

core competencies. There is no ‘golden thread’. This means that RSLs do not have

clarity with their Competitive Advantage. Correct identification of the generic

strategic direction, in this case the author recommends a differentiated strategy

thus indicates a responsive supply/value chain; perhaps a customer responsive

value chain?

82

Figure 6 Matching the Supply / Value Chain with Competitive and Generic strategy

Adapted from: Fisher (1997), what is the Right Supply Chain for Your Product? , Harvard Business Review, April 1997 p30 and Porter (1980), Competitive Strategy: Techniques for Analysing Industries and Competitors p39.

vi. TVH profile and segment their customers so that they can understand customer

need. By doing this, as within car dealerships, they will be able to service demand

and offer better value to customers re Toyota. By linking this database to a CRM

system, personalised, emotional value laden solutions can be provided.

vii. Staff rewards and penalties linked to customer service should be appraised to

allow staff to recognise the benefits of excellent customer services. The author

recognises the restrictions enforced by the regulatory authorities for bonus

Type of Supply Chain

Efficient Responsive

G

e

n

e

r

i

c

S

t

r

a

t

e

g

y

Co

st Lead

ersh

ip

Diffe

ren

tiated

83

payments, so he would suggest that Senior Management Team members lobby

the regulatory authorities regarding this issue to draw clarity.

viii. The organisation should determine the customer lifetime value as suggested in

2.2 Management and Customer Service Theory Literature Review. This would

allow a base figure for TVH to improve sustainability. In essence a relevant Key

Performance Indicator for the organisation.

ix. The organisation should initiate customer service training for all employees to

initiate culture change towards a customer centric culture.

84

7.0 Review and Reflection

The author provided a review of the research project below that allowed him to reflect

upon the process that he undertook in 2008. The reflection has taken a personal

perspective that has allowed him to determine the skills and knowledge he has gained

from the experience. This review and analysis can be found in Table 5

Finally the author suggested areas of research that readers may wish to undertake to

add to the knowledge gained so far.

Center for Support of Teaching and Learning (2005) states that:

‘Reflective practice involves thinking about and learning from your own practice

and from the practices of others so as to gain new perspectives on the dilemmas

and contradictions inherent in your educational situation, improve judgment, and

increase the probability of taking informed action when situations are complex,

unique and uncertain.’ (Center for Support of Teaching and Learning: 2005)

Kolb and Fry (1975) suggested in Bishop and Blake (2007/8) guide to reflective practice

that, fundamentally,

‘...whichever we learn, an important stage in our learning is the process of

reflection.’ (Kolb et al: 1975)

Using the Honey and Mumford (1995) learning styles, the author identified through

earlier questionnaires that he exhibited a balance of theorist and activist traits with an

imbalance of pragmatic and reflective styles. The author wanted to examine if his

learning styles had altered during the research project cycle toward a more reflective

style. To enable this to occur, the author identified that Moon (1999) as cited within

Bishop and Blake’s (2007/8) guide to reflective practice, suggested number of outcomes

of reflective practice:

Learning and material for further reflection

85

Action

Critical review

Personal and continuing professional development

Reflection on the process of learning or personal functioning

The building of theory

Decisions or resolutions of uncertainty

Problem solving

Empowerment and emancipation

Unexpected outcomes such as images and ideas that may be the solution to

problems

Emotional development in some form

The author took some of these outcomes to see if reflective learning has taken place. He

has identified that Gibbs (1988) as discussed within Bishop et al (2007/8) proposed a

model of reflection as seen in Figure 7. The author then distilled this into Table 5.

Figure 7 The Gibbs Reflective Cycle

Source: () Reflective Practice – A Guide to Reflective Practice

86

Table 5 Reflective Analysis of the Research Project (Gibbs Framework)

Event Description Feelings Evaluation Analysis Conclusion Action Plan

1. Methodological Approach

Uncertainty of approach made me feel apprehensive of the whole process

Baffled by conflicting views of tutors at the residential

The wrong approach may damage the whole research project

If made a mistake, I could still report and reflect upon the decision

The approach was well evidenced within the secondary research

This gave me direction and confidence

The methodology flowed well

I could have used my learning set better

I could have referred to my supervisor regarding my decisions earlier to build confidence

Start process earlier

Involve more people within the selection process

Use plenty of different secondary research

Just do it!

2. Volume of Secondary Research

Overwhelmed by the amount of literature collected

Fear that I would not have sufficient evidence to triangulate against

Information overload

I had not set my initial parameters for research out clearly

I had therefore gathered too much data

Set the parameters for research out earlier

Be disciplined with literature choice

Be more selective with that choice

Set the parameters for research out earlier

Be disciplined

Be more selective

Have a ‘hit list’ of secondary research

87

3. Lack of knowledge from one interviewee

Disappointment that one particular Interviewee who claimed to understand, could not grasp the fundamentals

The interviewee’s evidence was very poor

It gave me an insight into what really happened within this Co.

The interviewee was not truthful

He was only focussed upon sales

He demonstrated no depth

I could have interviewed a second person

I should have had a plan B

I should have stopped the interview and re booked with same or other dealer

Have a contingency

Greater preview of the questions with the intended audience

Factor in cognitive issues

4. Time Management

Under time pressure

That I would not get a positive reply from interviewees

Fear that I would not complete in time

Gave me a deadline to perform to

Competing priorities

My original timescales were not accurate

I did not make full use of my time effectively

I spent too long reading

The deadline gave me focus

I should have built in more flexibility into the project

I should have multi tasked more

Should have started earlier

Start earlier

Multi task where appropriate

Set priorities

Make time work for you

Allow the deadline to give you focus and purpose

5. Reflection and Criticality

Fear of self criticality and reflection

I might not be able to be critical enough

Happy that I could be self critical

Used good research to discover framework

Use the Gibbs Framework

88

Finally, the author has proposed the following areas for further study and research.

1. That further qualitative surveying is completed with a larger sample of car

dealerships re customer service, competitive advantage

2. Chief Executives are interviewed within all the organisations that are interviewed

to eliminate sales focus bias from respondents re customer service, competitive

advantage

3. Other market sectors are surveyed regarding re customer service, competitive

advantage e.g. The retail sector

4. A survey is conducted specifically to discover what alternative competitive

strategies are being undertaken by organisations due to the ‘credit crisis.’

5. A full value chain analysis on the Prospect Homes Group with an analysis of all

departmental structures to capture customer pathways and areas of value.

89

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